John M. Kunst, Jr.: State bailouts and bankruptcy
Breckenridge and Cincinnati
Still fuming over last November’s election results, Sirota uses his considerable intellectual talent to distort reality and pound the drum for more federal spending to bring us out of our growing financial woes. His latest column warns against Republican proposals to allow financially burdened states to file for bankruptcy rather than seek federal bailouts funded by taxpayer dollars. His argument is that the citizens of traditionally blue states with staggering debt like California pay more in federal taxes than they receive in federal funding while their counterparts, rural red states like fiscally sound Indiana, receive more in federal funding than they pay in federal taxes. Thus, argues Sirota, “traditionally blue states like California are perpetually subsidizing or … ‘bailing out’ traditional red states like Indiana.” Implicit within Sirota analysis is his socialistic belief that citizens of red states should welcome the confiscation of their tax dollars by a Congress that would prefer to bail out the troubled blue states.
This argument is fundamentally disingenuous and needs to be unmasked.
The troubled blue states like California have population density that overwhelms the number of taxpayers in rural red states like Indiana. Sixteen million taxpayers in California will certainly pay more in collective federal tax than will six million Hoosiers. To argue that Californians traditionally “bailout” rural red states with their federal tax dollars ignores the federal overlay that benefits all citizens of the 50 states, state boundaries notwithstanding. Federal programs funded by federal taxes know no boundaries and are intended to benefit all of us. Taxes on gasoline support federal highways so that all of us can go wherever we choose from sea to shining sea. Our collective tax dollars that fund the FDA, the USDA and other regulatory agencies are intended to convey health and safety benefits for all of us regardless of our state of residence. But, when a state like California has blindly and recklessly ignored fiscal reality for so many years and now can’t pay its bills, sorry, but our federal tax dollars were not intended to bail out spendthrift states. State insolvency is a problem to be rectified by the citizens of California, not the federal government with our tax dollars.
Sirota is a rare intellectual talent, but his distorted arguments are wearing thin. Here is a challenge for Sirota: Rather than rant against conservative proposals, craft some solutions other than tax the rich and close phantom corporate tax loopholes. As a nation, we cannot continue to spend our way out of a deficit. And, to that end, explain how state bailouts will reduce the federal deficit?”
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